The Client
David is a wealthy, long-term UK resident who wants to place £325,000, equivalent to the current nil-rate band, into a discretionary trust for his two adult children and future grandchildren.
His first instinct is to appoint his children as trustees. They know the family, understand his wishes and will ultimately benefit from the trust.
There is just one complication.
His son lives in the UK. His daughter lives and works in Canada and expects to remain there for around five years.
She also spends periods working at remote railway sites where communication can be difficult.
What looks like a straightforward family appointment suddenly creates a cross-border trust.
The Problem
A trustee is not simply a name on the paperwork. Trustees have ongoing legal, administrative and fiduciary responsibilities and generally need to work together when making decisions.
Appointing David’s daughter while she is living in Canada could therefore introduce additional questions around the trust’s tax residence, Canadian tax and reporting obligations and administration.
Plus, Canada might only be the start!
If she moves to another country in the future, the trust may need to be reviewed again. If the trustees want to make a payment to her while she is living overseas, the local tax consequences also need to be considered.
A £325,000 UK succession plan can quickly become an international tax and administration issue because one trustee moves country.
There are practical issues too. Documents may need signatures from people in different countries. Decisions may require both trustees. David’s daughter may not always be easily contactable because of her work.
Over the lifetime of the trust, an individual trustee could also die, lose capacity, decide to step down or simply no longer have the time to manage it.
The trust may be designed to last for years. The circumstances of its trustees almost certainly will not remain the same.
The Solution
Instead of placing responsibility on his children, David appoints a professional corporate trustee, such as Utmost International Trustee Solutions Limited (UITS), where appropriate for the relevant Utmost trust.
This separates two very different roles.
His children can remain beneficiaries. The professional trustee takes responsibility for administering the trust.
The family’s circumstances can still be considered when decisions are made, but David is no longer relying on two individuals living in different countries to manage the structure.
What Happens When the Family Moves?
David’s daughter can complete her assignment in Canada and eventually return to London. His son’s circumstances may change too.
But the trustee does not have to change simply because their lives do.
That continuity becomes increasingly important as the family expands, grandchildren arrive and beneficiaries potentially move to different jurisdictions.
Instead of the administration moving with the family, the professional trustee provides a consistent centre for the structure.
The Result
David starts with a simple objective: move £325,000 into a discretionary trust for his family.
By choosing a professional trustee, he avoids making that plan dependent on where his children happen to live, whether they have the time to administer a trust or whether they can readily participate in every decision.
The benefit is not simply convenience.
It is continuity, professional administration and greater separation between those managing the assets and those benefiting from them.